Jane's Copy Services is in perfect competition. Jane currently charges 10 cents per page, which is the going market price
Jane thinks that she can increase her profit if she lowers her price to 8 cents per page to increase the demand for her service. Is Jane right? Why or why not?
If Jane lowers her price, her profit will not increase. As a perfectly competitive firm, Jane can sell as much of her service as she wants at the going market price. And to maximize her profit, she should choose the quantity at which her marginal cost equals the market price. If Jane lowers the price, her total revenue, and hence profit, will fall.
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The shoeleather cost of inflation refers to
a. the redistributional effects of unexpected inflation. b. the time spent searching for low prices when inflation rises. c. the waste of resources used to maintain lower money holdings. d. the increased cost to the government of printing more money.
To answer the following question, please refer to the figure below. Concentrating only at the upper right quadrant, discuss the foreign exchange market equilibrium
What will be an ideal response?
At the equilibrium real interest rate in the open-economy macroeconomic model, the amount that people want to save equals the desired quantity of
a. net capital outflow. b. domestic investment. c. net capital outflow plus domestic investment. d. foreign currency supplied.
According to the bounded rationality hypothesis, an individual confronting a large number of complicated choices is most likely to respond by
A. using a simple rule of thumb to choose among a subset of easiest-to-evaluate options. B. utilizing readily available empirical evidence to assist in evaluating every option. C. using the ceteris paribus assumption to assist in simplifying and examining each of the possible options. D. assessing every available choice by developing sophisticated theories regarding each option.